Mixed stocks RBA raises interest rates

Chinese yuan It is likely to break through the 7 level against the dollar based on the two countries’ yield differentials, according to Julian Evans-Pritchard, chief China economist at Capital Economics. But the coin won’t weaken any further, he told CNBC’s “Squawk Box Asia” program.

“Obviously they are stepping up from the intervention in order to somewhat defend that threshold,” he said. “I don’t mean it won’t necessarily go through 7 temporarily, but I don’t think it’s going to go through that much, certainly kind of beyond the 7.2 that we saw during the trade war.”

Evans-Pritchard said China was reluctant to let that happen.

“If you go beyond that level, then expectations about currency risk become unconstrained, you risk seeing capital outflows on a larger scale. This is clearly something they would like to avoid at the moment,” he said.

The Chinese yuan last traded at 6.9498 to the dollar.

– Abigail Ng

Reserve Bank of Australia raise interest rates by 50 basis points, In line with analyst expectations in a Reuters poll.

This is the fifth consecutive increase since the central bank began raising interest rates in May.

Australia’s inflation rate was 6.1% in the June quarter, above the target range of between 2% and 3%.

– Abigail Ng

Russian Energy Minister Nikolai Shulginov said his country will ship more oil to Asia in response to restrictions on the prices of its oil exports, Reuters reported.

“Any measures to impose a price ceiling will lead to market deficits (for start-up countries) and increase price volatility,” he told reporters at the Eastern Economic Forum in Vladivostok.

Last week, the Group of Seven economic powers agreed to set the price of Russian crude to punish Moscow for its unprovoked invasion of Ukraine. Before the invasion, Russia exported nearly half of its exports of crude oil and petroleum products to Europe, according to the International Energy Agency.

– Natalie Tham

New data released on Tuesday showed that Japan’s profit growth for the month of July compared to a year earlier fell to 1.8% from 2% in June.

This is mainly due to sluggish rewards, Darren Tai, an economist at Capital Economics Japan said in a note.

Tai said earnings should continue to moderate amid tight labor market conditions and a planned 3.3% increase in the minimum wage over the coming months.

“With inflation approaching 3% by the end of the year, this means that real wage growth is likely to remain negative over the coming months, but consumers will be able to draw on pandemic savings to fund consumption,” he said.

– So Lin Tan

New Zealand’s inflation rate peaked at 7.3%, and reached in the second quarter of the year, in part due to lower oil prices from recent highs, ANZ Research said in a note.

“But we also think bringing inflation back to 2% will be a long journey that will require [Reserve Bank of New Zealand to lift the official cash rate] Finn Robinson and Sharon Zollner, research economists at ANZ, said that to 4% by the end of the year, and keep it there for several years.

The Reserve Bank of New Zealand raised interest rates to 3% in August.

Despite its peak, economists say the risk of it rising again is there. For example, if labor costs rise, inflation is unlikely to return to the Reserve Bank of New Zealand’s 1% to 3% target range without the cash rate rising above 4%.

“Global inflation risks abound as well, with hyper-tight labor markets, climate change, geopolitical tensions, energy shortages and trade disruption, all of which have the potential to generate a sustained period of high global inflation going forward,” they said.

“It would also make the RBNZ’s job of getting inflation back to target even more difficult.”

– So Lin Tan

The Reserve Bank of Australia is expected to raise interest rates by another 0.5 percentage point on Tuesday on the back of a “full-employment labor market, hyperinflation overrun and the fact that financial conditions remain very favorable,” Goldman Sachs chief economist for Australia and New Zealand Andrew Book said.

Bock stated that markets do not expect the central bank to soften its stance on curbing inflation when it announces its interest rate decision at 2:30 PM EAS.

“I think markets will be particularly sensitive to any kind of indication that the RBA is considering stepping back from the pace of tightening to say 25 basis point increases,” Bock said.

“I think the main language about expecting more tightening over the coming months will be retained. But also the warning that policy is not on a predetermined path.”

There are risks with continued rate hikes such as “unregulated relaxation in the housing market” but Bock says “that is not our central scenario”.

– So Lin Tan

Investors should navigate the constant market volatility by getting into ETFs with a long-term growth story, according to one portfolio manager.

“The idea of ​​owning an ETF instead of one specific player — having a whole basket and riding the wave of more capital investment in cyberspace,” John Petrides, portfolio manager at Tocqueville Asset Management, told CNBC.

He named his favorite ETF for cybersecurity, along with two others.

CNBC Pro subscribers can read more here.

– Weezin Tan

Strategists are urging investors to allocate more of their portfolios to cash during these volatile times, as higher interest rates mean they are now offering higher returns.

“Cash was king,” Bank of America said in a note on Sept. 1 last month, as most asset classes — such as stocks, bonds and even commodities — posted losses.

Here’s how to add it to your investment portfolios, according to the pros.

CNBC Pro subscribers can read more here.

– Weezin Tan